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1978 Ins. L.J. 274 (1978)
Insurance as a Contract of Adhesion

handle is hein.journals/inslj40 and id is 274 raw text is: Insurance as a Contract
of Adhesion
By TELFORD F. HOLLMAN
Dr. Hollman looks at a number of decisions that have held
that since insurance contracts are contracts of adhesion, they
must be construed against the party who dictated the terms.
T HE INTERPRETATION of insurance contracts is one of the
most intriguing areas of the law. Insurance contracts are adhesion
contracts, and as Corbin states:
'Adhesion contracts' include all 'form con-tracts' submitted by
one party on the 'basis of this or nothing. Ehrenzweig defines them
as 'agreements in which one party's participation consists in his
mere adherence, unwilling and often unknowing, to a document
drafted unilaterally and insisted upon by what is usually a power-
ful enterprise.' He includes the following classes: Insurance Policies;
Commercial Loan Contracts; Transportation Contracts; Employment
Contracts.'
In Liberty Mutual Insurance Company v. Allied Mutual Insurance
Company,2 the court noted that the principle of construing insurance
contracts and other contracts of adhesion against the party who
dictated the terms is widely accepted.
Thus, in Bull v. Sun Life Assurance Company,3 the evidence indi-
cated that a seaplane was forced to land on water and was so dis-
abled that it would never fly again without repairs, that the insured
was on the fuselage trying to inflate a rubber boat for the purpose
of escape, and that he was fatally injured during strafing by an
enemy airplane. The court ruled that the insured did not meet death
as a result, directly or indirectly, of service, travel, or flight in any
'6A Corbin on Contracts, 1f 1446, at 400 (1962); see also, Ehrenzweig, Adhesion
Contracts in the Conflict of Laws, 53 Columbia Law Reziew 1072 (1953).
2442 F24d 1,151 (CA-10 1970); see also, 3 Corbin on Contracts,  [ 559, at 262
01960). 44 C.J.S. Insurance 1297, at 1166 (1945), states: It is a cardinal principle
of insurance law that a policy or contract of insurance is to be construed liberal-
ly in favor of the insured or his beneficiary and strictly as against insurer.
'Greider and Beadles, Law and The Life Insurance Contract, at 184 (3rd Ed.
1974), state: 'One of the basic rules of construction in general contract law
is the rule that ambiguities in a contract of adhesion will be construed against
the party who drafted the con-tract and thus in favor of the other party .... 
*9 LirE CAsEs 707, 141 F2d 456, 155 A.L.R. 1014 (CA-7 1944), cert. denied
323 US 723, 65 SCt 55 (1944).
1978, Telford F. Hollman
Insurance Law Journal - May, 1978

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